Generating cash is essential for any business, but not all cash-rich companies are great investments. Some produce plenty of cash but fail to allocate it effectively, leading to missed opportunities.
Cash flow is valuable, but it’s not everything - StockStory helps you identify the companies that truly put it to work. Keeping that in mind, here is one cash-producing company that excels at turning cash into shareholder value and two best left off your watchlist.
Two Stocks to Sell:
Tenable (TENB)
Trailing 12-Month Free Cash Flow Margin: 25.4%
Starting with the widely-used Nessus vulnerability scanner first released in 1998, Tenable (NASDAQ:TENB) provides exposure management solutions that help organizations identify, assess, and prioritize cybersecurity vulnerabilities across their IT infrastructure and cloud environments.
Why Does TENB Worry Us?
- Products, pricing, or go-to-market strategy may need some adjustments as its 10.4% average billings growth over the last year was weak
- Estimated sales growth of 7.1% for the next 12 months implies demand will slow from its two-year trend
- Operating margin improvement of 3.4 percentage points over the last year demonstrates its ability to scale efficiently
At $26.40 per share, Tenable trades at 3.1x forward price-to-sales. Dive into our free research report to see why there are better opportunities than TENB.
Kontoor Brands (KTB)
Trailing 12-Month Free Cash Flow Margin: 8%
Founded in 2019 after separating from VF Corporation, Kontoor Brands (NYSE:KTB) is a clothing company known for its high-quality denim products.
Why Do We Pass on KTB?
- Weak constant currency growth over the past two years indicates challenges in maintaining its market share
- Poor free cash flow margin of 13% for the last two years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
Kontoor Brands’s stock price of $78.25 implies a valuation ratio of 12.8x forward P/E. If you’re considering KTB for your portfolio, see our FREE research report to learn more.
One Stock to Buy:
Copart (CPRT)
Trailing 12-Month Free Cash Flow Margin: 30.3%
Starting as a single salvage yard in California in 1982, Copart (NASDAQ:CPRT) operates an online auction platform that connects sellers of damaged and salvage vehicles with buyers ranging from dismantlers and rebuilders to used car dealers and exporters.
Why Will CPRT Beat the Market?
- Annual revenue growth of 15.7% over the past five years was outstanding, reflecting market share gains this cycle
- Incremental sales over the last five years have been highly profitable as its earnings per share increased by 19.3% annually, topping its revenue gains
- Strong free cash flow margin of 24.2% enables it to reinvest or return capital consistently, and its rising cash conversion increases its margin of safety
Copart is trading at $38.93 per share, or 23.2x forward P/E. Is now a good time to buy? See for yourself in our in-depth research report, it’s free for active Edge members.
Stocks We Like Even More
If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.
Don’t wait for the next volatility shock. Check out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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